NZD/USD approaches 0.6000 as hopes of a US-Iran peace deal boost risk appetite

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The New Zealand Dollar (NZD) keeps marching higher at two-month highs against the US Dollar (USD) on Thursday, as reports of progress in the US-Iran peace deal and lower Oil prices keep demand for the safe-haven US Dollar subdued.

NZD/USD rallies further within two-month highs and approaches 0.6000.
Hopes of a US-Iran peace deal are boosting risk appetite and weighing on the USD.
Lower Oil prices are providing additional support to the Kiwi.

News reporting that Tehran is reviewing a 14-point peace plan submitted by the US is buoying risk appetite on Thursday. US President Donald Trump has contributed to lifting sentiment by expressing optimism about a swift end to the war, stating that he held “very good talks” with Iran and suggesting a chance of reaching a deal.

Furthermore, Al Hadath, a sister channel to Al Arabiya, posted on X earlier on Thursday that intense communications are underway to reopen the Strait of Hormuz. Crude prices are trending lower, with the West Texas Intermediate (WTI) at levels just above $90 and Brent Oil below $100, providing support to the NZD, as New Zealand is an Oil-importing economy.

On the macroeconomic front, data released earlier this week revealed a decline in New Zealand’s Unemployment Rate in Q1, although the impact on the Kiwi was minimal, as these figures hardly reflect the effects of the war in the Middle East.

In the US, ADP Employment figures showed a larger-than-expected increase in job creation in April, setting a positive precedent for Friday’s Nonfarm Payrolls report. Later on the day, the weekly Initial Jobless Claims and some Fed speakers will provide some data to chew on Thursday.

New Zealand Dollar FAQs

What key factors drive the New Zealand Dollar?

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

How do decisions of the RBNZ impact the New Zealand Dollar?

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

How does economic data influence the value of the New Zealand Dollar?

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

How does broader risk sentiment impact the New Zealand Dollar?

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.